Q4 2025 Earnings Call — February 26, 2026
Analyst Stephen Gengaro (CIFL): Thanks. Good morning, everybody. You know, my first question is on the guidance and maybe two parts. One is, a couple months ago, you had a pretty high expectation for the fourth quarter, and clearly you fell short. And now we're looking at, you know, a pretty big ramp in 2026. How do you think about the components of guidance and sort of de-risking the parameters you put out versus guidance historically?
Executive Name: Morning, thanks for the question. First, like, you know, you look at the range as I talked about when we talked about the guidance in of itself. We're looking at the improvements that John has implemented coming out of fourth quarter, looking at the backlog of orders that we have to get to the bottom end of the range, then looking at the opportunities that we're working on, the fact that we're bringing a new line in to give us the top end of the range. But we've tried to really look at how we can change our discipline as a company to not have happen what happened in 2025. So the range is 100 million, the midpoint is 350. What hasn't changed about the company is the demand that's out there for the product. What we're trying to do in 2026 is better control our scale, get the manufacturing throughput quality and margin expansion that we need, and really look at where we think we can land without going for a degree of difficulty that's a 10, but coming in with something that we can manage to over time.
Analyst Stephen Gengaro (CIFL): Now, that's helpful. And then just, I imagine this is correct, but when we think about the quarterly growth, I mean, I would imagine the 1Q would be above 4Q, but the low point and then escalate throughout the year. Is that a reasonable pattern?
Executive Name: Well, look, Stephen, so part of what we have coming in, and, you know, we don't give quarterly guidance, but from a standpoint of coming into the year, you know, we're coming off a high point. We're delivering the customer schedules. I think we'll be around the fourth quarter number as we look at, like, what we have to deliver to customers. And there's also commissioning revenue in there as well. And then from there, sequentially grow.
Analyst Julian Dumoulin-Smith (Jefferies): Hey, good morning, team. Thanks for the time. Can you guys comment a little bit about what exactly those bigger projects that you're talking about are? Like which ones in particular seem particularly ripe, right? Again, just to maybe track against the milestones this year and what would materialize? And also, if you can speak a little bit against, you know, you've got a materially larger backlog in aggregate. What's the duration of that backlog when you think about it, just given that, you know, call it 300 of it is burning off this year, if you will?
Executive Name: Julian, great question. Look, I think we go back on the material large stuff. But look, I think we all know the industry needs power, needs power quickly. But at the same time, we still operate in a framework where approvals and, you know, queues are long, so we're kind of hedging that. But like, you know, Nathan talked about two large projects in NYSERDA that, when approved by NYSERDA as part of their bulk storage, would go into delivery almost immediately. So that's two of them in there. We've talked about PJM and what we're doing with Talon. There's other projects that we have that we haven't discussed with large hyperscalers that could potentially come in. And then Nathan talked about what appears to be, when you look at the surface, they look like small projects, but they're small projects with a big pipeline of opportunity that you deliver and grow and continue to deliver. And we just got to work through that. We'll keep everybody updated on that as we move forward from there.
Analyst Julian Dumoulin-Smith (Jefferies): Got it. And then just if I can follow up there, the defense space seems intriguing here. Can you comment about that end market and the opportunity you see there? What does a project look like in that space, size, duration? And just even elaborate a little bit more about what you guys were talking about a second ago in the timing of seeing some of that come to fruition.
Executive Name: So defense, I think you start off with NDAA, which is how the Defense Department of War purchases. In the NDAA, they're being told to buy American products, and I think we have that American product. As we go through that, there's a lot of things we have to go through as far as working with different branches of the government to get approval. I think a big thing that helps accelerate us is the due diligence process that we went through with the Department of Energy to get our loan. But like we're working through across all branches of the military to see what the needs are. And like what we're looking at is what do they need and they also have, there's also large power growth that they have and how do we meet those needs and then we go through and show them how the product is. But also as you work with the military, there's things that we're doing to make sure that we hit all their requirements because we want to hit the ground running. But that's something that we'll continue to work on and we are working on and we do spend a significant amount of time down in Washington walking everyone through what the technology is capable of.
Analyst Julian Dumoulin-Smith (Jefferies): Got it. Excellent. Thank you for that. And then lastly, if I could just ask just given where you are coming out for 26, how do you think about the ramp of line three and four, right? So, you know, how do you think about when and the timing and scaling of that, right? Obviously you got line one and now line two here, but three, four, four of a 27 question, right?
Executive Name: And I think Julian, like this goes back to disciplined execution, right? It's a great question, right? So John, John's taking us into a new building and the new building changes the game from a throughput efficiency and cost. Turtle Creek is a fully functioning factory that's up at 2 gigawatt hours of production. It hit its nameplate capacity coming out of 2025. But if you have a lean mindset, you're constantly looking at how to get things better, how to improve on things. That goes with how you operate your manufacturing, but also how you implement capacity expansion. So what we've told John is come up with a plan that we can execute and implement lines within the window of when a customer orders to when they ship. So as things come in, we'll be able to do that. What John has done in his time, not only did he increase output 80% in the fourth quarter, if you look at quarter over quarter sequential manufacturing output, he also went in and revamped our automation partnerships.
Got us in with tier one automation providers, broke up how we were doing the different pieces of that and positioned those suppliers to be able to come up with a framework agreement approach with them where we can put a signal in to them and they can deliver faster than what we're doing on line two today. Line two today, part of what's happening there is it's a new building and there's a lot of work that we got to go through and we want to make sure that we get that right and we get that ramp right and the transition and balancing between the two facilities.
Analyst Mark Straus (JP Morgan): Yeah, good morning. Thank you very much for taking our questions. I'm just curious if you can comment on the competitive environment that you're seeing recently. Obviously, you guys are making good progress with your backlog, but one of your publicly listed peers that's traditionally in lithium-ion, they have really been talking up their long-duration pipeline the last couple of quarters. You know, there's a very large project, long-duration project up in Minnesota that just recently got announced. Just kind of broadly speaking, I know those are completely different technologies in both of those cases, but just kind of broadly speaking about the competitive environment would be great.
Executive Name: Mark, I think first off it points to what we're showing in our backlog about longer duration discharges coming to fruition. I think it's great to have other companies that are doing it because it just goes to show that what we've been talking about for five years, the market's now there. I've said this many times, there's many different use cases and I always draw the correlation of energy storage is going to look like gas turbine technology over time. You have different types of gas turbines that do different things with different efficiency points. So I think what was announced in Minnesota, delivery in 2028, is a great example of people looking for longer duration energy storage, longer than what we do. At the same time, Nathan showed our pipeline is up above 40% for longer duration. And it's now becoming 40% of our pipeline. Sorry, I misspoke. But it's becoming more and more. And I think established players, there's a market out there for that product. I think we've come up with the work that Francis has done and the team. We've come up with a solution that delivers in that direction, four to 16-hour spot, which is going to be very important.
And look, we've been running load profiles here in our test facility in Edison, New Jersey, using the load profiles of data centers, and our technology matches up great with that. So we're encouraged by that, but there's a lot of demand out there, and I think it's great there's other players. It's going to be a competitive marketplace, and I think we have a product that competes.
Analyst Craig Shearer (Tui Brothers Investment Research): Good morning. Thank you for taking the questions. Can you opine on the potential margin deltas, gross margin deltas between U.S. and international orders? Does American-made help in any way internationally to the degree some trading partners want to right-size trade balances on a national level? And can you give some color on the timeline for that foreign power company national lab testing and the level of prospective order flow should they deem you're having the most optimal solutions?
Executive Name: Craig, just a couple of things inside of that. I think where we're seeing interest in our product internationally has less to do with politics and more to do with performance. I think people are looking at what the product delivers and less about trade balances. I think having a product where we go through and talk about the intrinsic value of it is what's attracting our customers, whether that's domestic or international. I think we're starting to plant seeds, starting off in Germany, and obviously we have a big pipeline of opportunity in the UK that Nathan talked about. Just on your last point here, the customer that Nathan talked about is a global utility that's doing testing in the United States at a lab that is tied to a project for the NYSERDA program. By the way, that testing is great. We love doing that because it gives us data to show people about how the product performs and put this through its paces. Doing stuff like this, that's what brings out intensity and improved performance on the product that we have out in the field.
Analyst Craig Shearer (Tui Brothers Investment Research): And would one assume that international sales are going to be slightly lower gross margin?
Executive Name: No, I wouldn't assume that.
Analyst Craig Shearer (Tui Brothers Investment Research): Okay. And my last question, and I apologize if my quick math is incorrect, but it looks like you burned through maybe $65.75 million in operating cash flow before working capital changes in the quarter. Thoughts about tempering that bleed as you move in the positive gross margin in the second half of 26?
Executive Name: Look, our goal, as Nathan talked about, we've capitalized the company. We are focused on being good stewards of that capital. I think as you look at that, one of the reasons why we removed the going concern for the company in this quarter is that we see a trajectory to be able to manage the company strategically and for the long term. And then obviously, like, there was a ramp into a build. There was a ramp into a build plan that then levelizes, but then will ramp again. So we managed through that, but, like, as we look at where the company is, we have cash to be able to grow it over the long term.
Analyst Jeff Osborne (CD Callen): Thank you. Just a couple quick ones. I think last quarter you mentioned that the yield on the bipolar line that started, I believe, in July was 98%. I was wondering what the fabrication yields were in the fourth quarter.
Executive Name: Yeah, John, take that one.
Executive Name: So the bipolar yields in the growing from there. So we're basically, within January, hitting the target. We've reduced that significantly, and we'll continue to do so. And we did not anticipate that with the automation. The goal for that automation is 97% for special. And we're well on our way there.
Analyst Jeff Osborne (CD Callen): Perfect. And then can you just touch on, spend a few seconds on what sort of field performance has been, safety, reliability, commissioning schedules relative to expectations?
Executive Name: Yeah, so Jeff, I don't know if you heard, I don't know where we dropped off before. Look, we continue to go through and execute out in the field, bringing a new product online, operating out, operating. We were doing our operations meeting this morning and continue to see good cycles out in the field, as Francis talked about. We continue to learn on each cycle and incorporate those things back into the install base from a commissioning cadence standpoint. It's a mix and cadence of things where there's permitting challenges, there's bringing the site up to speed, there's getting our stuff up and running, there's integrating everything, and we work through that with the customer on a customer-by-customer basis. But if you go back to that page I showed, we ship to 10 customers, recognize revenue on 18 customers, and that ties back to the commissioning that we have.
Analyst Jeff Osborne (CD Callen): And just very quickly, are you capturing higher price as the duration use case extends out to six, eight hours and beyond, or is pricing consistent with a sub-four-hour relative to longer duration?
Executive Name: Well, I mean, Jeff, I think it all depends on how you look at that. I think when you look at the value proposition of EOS and you look at our ASP in the backlog, the ASP in the backlog is higher than what you would expect for a shorter duration product. What we do is we sell on a levelized cost of storage basis, which is a little bit higher on the CapEx side, but a lot lower on the operating cost side. And that's what the customers evaluate to make their purchasing decisions.
Executive Name: Thanks, Jeff. I am showing no further questions
at this time.
I would now like to turn it back to CEO Joe Misrandolo for closing remarks.
Executive Name: Yep. Thanks, everyone. And again, thanks for the question and the continued engagement. A couple points I want to close with. First, you know, demand for long-duration, domestically sourced energy storage is not a question. The grid is changing. The load growth is real. Whether it's AI electrification, industrial reshoring, these are structural changes to the power grid in the United States, and they're not cyclical. The market is moving towards solutions that match what we bring to the market, and that's how we've positioned EOS for the long term. Second, 2025 was building a foundation, strengthening our balance sheet, scaling manufacturing, standardizing our product architecture, improving operational cadence. We delivered great revenue growth. It reflects the progress that we've made. It's not linear yet, but it's directional and it's improving. Third, 2026 is a year where we have to show disciplined execution. Our guidance reflects what we believe we control as we sit here today. We'll keep everybody updated as we go through the year and where we wind up.
I feel good about where the team is positioned and execution improves predictability improves so we know we've got that's what that's ultimately where we need to focus on and that is where the team is focused on a day-to-day basis and then profitability for the company look it's a scaling equation you know on an automation you know how we move material efficiency bring a lean mindset finding waste eliminating waste resetting it going back and doing it again and again again and you see the sequential improvement in margin that we need to continue until we become margin profitable, and that's the goal of the company to deliver long-term, valuable shareholders and customers. Look, we strengthen our liquidity. It helps us operate the company more strategically. It gives us runway to be able to execute. EOS is an infrastructure business, right? We are infrastructure businesses are built on discipline, consistency and operational trust. That's what we're building and that's what we have to show and deliver. We appreciate the questions and the focus and really the attention to EOS across the board of all of our stakeholders.
We look forward to demonstrating this continued improvement and progress quarter over quarter as we build a great energy infrastructure company. Thanks for listening today. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.